The present invention relates generally to a tax refund system, and more particularly, to a system in which a taxpayer receives a loan based on his or her estimated tax refund prior to the year end holidays of the calendar year preceding the year in which the taxpayer files his or her tax return forms. In a preferred embodiment of the present invention a taxpayer may have an estimated refund amount in their possession prior to the December holidays and prior to filing his or her tax return forms for that tax year.
Tax refunds are available when a taxpayer pays too much tax during a tax year. By completing tax return forms and filing them with the proper taxing authority, the taxpayer may receive a refund for the amount overpaid. Often taxpayers use tax preparation companies to prepare and electronically file their tax return forms with the taxing authority. In circumstances where a taxpayer has used a tax preparation company on repeated and consecutive years, the tax preparation company may be able to estimate the amount of a tax refund the taxpayer will be entitled to receive for the current tax year, prior to the completion of that tax year. By doing a trend analysis as well as looking at current year income levels, the tax preparation company can arrive at a reasonable approximation of the amount of tax refund the taxpayer will be entitled to receive for that tax year. In exchange for the taxpayer assigning the tax refund amount to the tax preparation company or lending entity, the tax preparation company by itself or through a financial institution may provide the taxpayer with a loan in an amount less than, or equal to or greater than the estimated tax refund amount due the taxpayer for that tax year.
Refund anticipation loans are known, in which a taxpayer receives a loan in anticipation of a tax refund due. However, in these situations the tax information is completed for the tax year for which the refund is due prior to the loan being granted to the taxpayer. In other words, the tax preparation company has completed the tax return forms necessary to file with the taxing authority before the loan is approved. This is contrary to the present invention in which the tax return forms are not able to be completed because the year end information is not yet known. Instead, with the present invention, a loan is provided to the taxpayer based on trend analysis from prior year's tax returns as well as other personal information supplied by the taxpayer. In this manner, with the present invention, taxpayers may receive a loan prior to the year-end holidays in order to be able to spend the anticipated tax refund for holiday shopping.
The present invention will be described in greater detail hereinafter. The present invention is described in the form of preferred embodiments and is not to be limited to those preferred embodiments but instead shall be given the broadest scope of protection affordable under the law in view of the allowed claims.